Solar Market Insight Report: 2013 Year in Review

GTM Research and SEIA have compiled a comprehensive US solar report describing all the key metrics from 2013 and giving a forecast for 26% growth to 6GW in 2014.

Based on their report the U.S. solar industry has much to celebrate in the year 2013. Photovoltaic (PV) installations proliferated, increasing 41% over 2012 to reach 4,751 MW. Solar was the second-largest source of new electricity generating capacity in the U.S., exceeded only by natural gas. And the cost to install solar fell throughout the year, with average system prices ending the year 15% below the mark set at the end of 2012.

The U.S. solar market showed the first real glimpse of its path toward mainstream status in 2013. The combination of rapid customer adoption, grassroots support for solar, improved financing terms, and public market successes indicated clear gains for solar in the eyes of both the general population and the investment community.

The solar industry also became a major part of a much larger discussion around the future of electricity and electric utilities. As distributed solar gains steam, and as adjacent technologies such as energy storage become economically viable, the traditional utility business model is increasingly called into question.

Increasingly, solar is not bound by its cost, but rather by its role in the electricity sector. And as solar continues along its path toward the mainstream, its integration with the broader electricity market from a technical, market and regulatory perspective will become one of the most important issues in the industry.

Key Figures

• The U.S. installed 4,751 MW of solar PV in 2013, up 41% over 2012 and nearly fifteen times the amount installed in 2008

• There is now a total of 12.1 GW of PV and 918 MW of CSP operating in the U.S.

• There were 140,000 individual solar installations in the U.S. in 2013, and a total of over 445,000 systems operating today

• Q4 2013 was by far the largest quarter ever for PV installations in the U.S., with 2,106 MW energized, up 60% over the second-largest quarter (Q4 2012)

• More solar has been installed in the U.S. in the last eighteen months than in the 30 years prior

• The market value of all PV installations completed in 2013 was $13.7 billion

• Solar accounted for 29% of all new electricity generation capacity in 2013, up from 10% in 2012. This made solar the second-largest source of new generating capacity behind natural gas.

• Weighted average PV system prices fell 15% in 2013, reaching a new low of $2.59/W in the fourth quarter

• They forecast 26% PV installation growth in 2014, with installations reaching nearly 6 GW. Growth will occur in all segments, but will be most rapid in the residential market.

• The U.S. also installed 410 MW of concentrating solar (CSP) in 2013, increasing total CSP capacity in the U.S. by more than 80%

2013 TOP 10 SOLAR STATES

The study counts down the Top 10 Solar States based on solar capacity installed in 2013. California installed half of all the solar capacity it has ever installed in 2013, but Texas, ranked 8th, has enough solar potential it could power the world twice over.

Additional highlights from 2013 in the U.S. solar market include:

• Positive Early Signs in net energy metering (NEM) Debates: Broadly speaking, the solar market has remained unscathed thus far. But the next two years will bring both new venues for NEM debates and longer-term decisions in the existing battlegrounds.

• Financial Innovation: After years of discussion and speculation, a number of new financing mechanisms for solar emerged in 2013.

• Cost Reduction: PV module prices increased slightly in 2013, the first annual price increase since 2008. However, prices fell substantially for other components such as inverters (which decreased by 15% to 18%) and racking systems (19% to 24%). In addition, a range of other factors including downstream innovations drove down overall system prices throughout the year in all market segments. By the end of the year, system prices had fallen 9% in the residential market, 16% in the non-residential market and 14% in the utility market.

• California Sees Unparalleled Growth: California alone installed more than half of all solar in the U.S. in 2013. In fact, the state installed more solar in 2013 than the entire country did in 2011. California led the pack in each market segment and saw a doubling of installations in both the residential and utility segments. Looking to 2014, California shows no signs of slowing down, particularly in the distributed generation market.

• The Ascent of North Carolina, Massachusetts and Georgia: While Arizona and New Jersey, historically the second- and third-largest state solar markets, faltered in 2013, three states in particular emerged to fill the gap. North Carolina grew 171% over 2012 to install 335 MW, Massachusetts grew 76% to install 237 MW, and Georgia grew 762% to install 91 MW in 2013.

• The Realized Promise of Centralized Solar: The U.S. installed over 2.8 GW of utility solar in 2013, up 58% over 2012.

2.Photovoltaics

Installations

The U.S. installed 4,751 MW of PV in 2013, up 41% over 2012. Annual weighted average PV system prices continued to decline in 2013, reaching a historic low of $2.89/W.

Of the 4,751 MW installed in 2013, 2,106 MW (44%) came in the fourth quarter. This makes Q4 2013 by far the largest quarter in the history of the U.S. market, exceeding the second-largest quarter by 60%. This end-of-year boom came from all market segments, but was particularly strong in the utility market, which saw over 1.4 GW installed across fifteen states in Q4.

The fourth quarter boom experienced in 2013 is consistent with previous years. The U.S. market tends to see a significant jump in installations at the end of the year, regardless of whether there are major incentives that are expiring.

Market Segment Trends

Residential

792 MW installed in 2013, representing 60% annual growth.

Over the past three years, the U.S. residential solar market has been distinguished by its remarkably consistent incremental growth.

Most notable about 2013 was the Q4 boom, in which installations jumped 33% over the previous quarter – the largest quarterly increase in recent history.

This year-end jump, and indeed much of the annual growth, is attributable primarily to California. While the California market has always been the largest for residential solar, its importance has only grown over time, with its market share of national installations increasing from 43% in Q1 2010 to 55% in Q4 2013. As we have noted previously, California is the first major solar market to begin the transition away from state-level incentives.

Non-Residential

1,112 MW installed in 2013, representing 4% growth over 2012.

Growth in 2014. In particular, look for significant figures out of New York, Arizona, and Colorado.

Utility

2,847 MW installed in 2013, representing 58% growth over 2012.

Looking forward to 2014, the demand landscape has shifted toward projects in the 1 MW to 20 MW range in order to meet utilities’ near-term capacity needs and remaining RPS compliance obligations.

System Prices

2013 ranks as another banner year for average installed price reductions across all market segments in the U.S. Quarter-over-quarter, the national average system price declined by 15%, falling from $3.05/W in Q3 to $2.59/W in Q4, while dropping 14.8% from $3.04/W a year earlier.

$24/kg to $25/kg range and U.S. module pricing increasing by $0.01/W to $0.02/W in January and February.

Market Outlook

For 2014, the study forecasts 26% overall growth in the U.S. solar market, with installations reaching nearly 6 GW. This growth should occur in all three segments, though at varying magnitudes.

Forecast details by state and market segment are available in the Full Report.